GE Pushes Fracking Research With Lab in Bet on Shale Gas

April 3 (Bloomberg) -- General Electric Co. will spend $110
million on a research lab in Oklahoma City to study ways to
improve extraction of hard-to-reach oil and gas deposits,
including hydraulic fracturing and horizontal drilling.

The facility will hire as many as 125 engineers and
scientists in the coming months and will eventually expand its
research to more conventional drilling techniques, Chief
Technology Officer Mark Little said in a telephone interview.

Oil and gas is GE’s fastest-growing segment, with revenue
up 57 percent to $15.2 billion since 2009, and Chief Executive
Officer Jeffrey Immelt is betting that other divisions can
profit as drillers tap more shale formations. The center will
join labs from Shanghai to Rio de Janeiro and be the only one
focused on a single GE business, Little said.

“This is a robust, dynamic industry that’s growing and
ripe for technology infusion, and we think we can add a lot to
it,” Little said. GE is announcing the project today in
Oklahoma City.

In addition to fracking, GE researchers also will
investigate how to meet oil and gas wells’ electricity needs,
reduce the environmental impact of unconventional drilling and
help manage water usage in petroleum exploration, Little said.

Fracking is a drilling technique that forces millions of
gallons of water, sand and chemicals deep underground into rock
formations trapping oil and gas. It’s unleashing previously
inaccessible reserves, contributing to a surge in U.S. fossil-fuel output, while spurring attacks from environmentalists as a
threat to drinking-water wells and reservoirs.

Energy Acquisitions

GE’s oil and gas business’s growth was jump started by $11
billion of acquisitions during a six-month period ended in 2011.
The Fairfield, Connecticut-based company may consider additional
purchases in the industry “over the next couple of years,”
Chief Financial Officer Keith Sherin said at a February meeting
with analysts and investors.

Oklahoma offered incentives, including participation in a
program that provides quarterly payments of as much as 5 percent
of new employees’ salaries, to secure the GE research facility,
Governor Mary Fallin said in a telephone interview.

“Having one of the most important companies in the world
invest and create a new global research center in our state is
going to be a tremendous boost to the great resources we already
have in our state in the oil and gas sector,” said Fallin, a
Republican.

GE is still scouting for a location for the lab, and hasn’t
disclosed an opening date.

Chesapeake Energy Corp., the second-largest U.S. natural
gas explorer, and Devon Energy Corp. are both based in Oklahoma
City. GE said it has more than 550 employees in the area working
on electric submersible pumps for oil and gas drilling. Its
global research operation is based in Niskayuna, New York.